How the Clarity Grade Impacts a Diamond’s Price

Diamonds are graded according to four basic qualities: carat, cut, clarity and color. Collectively, these characteristics are famously known as the “four C’s” of diamonds. While each characteristic plays a role in determining the price of a diamond, they do not have the same level of impact on a diamond’s appearance.

First, Let’s Take a Look at the 4Cs & Their Price-Altering Factors

Cut is largely based on the actions taken by a cutter when the rough diamond is polished. It can also be considered the most important human factor to determining a diamond’s beauty. Undoubtedly, a well cut stone is more expensive since more rough material and labor is required in the polishing process.

When it comes to carat weight, prices of diamonds are most significantly affected. As the weight and size of the stone increases, you can see an exponential increase in prices.

Color and clarity remain: these are the two characteristics which actually describe a diamond’s material properties. In the case of color, the price jumps across different grades are actually relatively (!) small and pretty close to each other. Typically, you can expect to see a linear increase in price as color grades improve.

When it comes to clarity, the correlation between price and clarity grades can be shocking when we go up high in the clarity scale. Generally, prices increase linearly in the lower grades. For example, a jump from slightly included stones (SI) to very slightly included stones (VS) isn’t going to be colossal. However, as soon as you reach the VVS or IF levels, prices start to take on a steep curve and rise in a staggering manner.

Clarity is only one of the elements that affects value and rarity. For a comprehensive list of factors that affect a diamond’s pricing, you need to read this article for more details.

Price Chart Comparison of the Various Clarity Grades

Below is a price chart I took from JamesAllen.com based on similar 1 carat sized round diamonds with Excellent Cut, F color, Excellent Polish/Symmetry. Clarity is the only variable here and you can clearly see how the prices change with increasing clarity.

Let’s do a quick comparison to explain our findings. A 1.00 carat round diamond with F color, SI2 clarity retails at approximately $6,500. On the other hand, another diamond with similar specifications except for its VVS1 clarity is retailing at approximately $13,500.

While there is a difference of 5 clarity grades from SI2 to VVS1, you see a whopping 100% increase in prices! Needless to say, the price jump is even higher if we were to compare internally flawless diamonds instead.

Why Do Prices Vary Even Within the Same Grade?

If you are observant, you might have noticed that there are small variances of prices in each clarity grade. For example, within the VVS2 grade, the 3 diamonds listed above have the following prices: $11,620, $11,920, $12,620. These differences in prices could be due some other reasons like the precision of cut (table/depth variations, optical symmetry etc…) and vendor markup.

The point I want to bring across here is that a cheaper stone doesn’t necessary means it is worse. Likewise, you cannot assume that a more expensive stone is necessarily better. In order to determine which diamond has better optical performance or cut precision, you need to analyze additional data like Idealscope/ASET or Sarin reports.

Wait… Did You Leave Out the Flawless Category?

Yes, I did. The reason why I didn’t include them in this comparison is that I couldn’t find one within the 1.00 carat, F color, triple excellent range. Believe it or not, flawless diamonds are super rare and generally unavailable in the consumer market. In fact, most jewelers have never even seen one in their entire career.

There are a couple of reasons why flawless diamonds are so scarce. First of all, it is extremely rare to find suitable rough stones for polishing into flawless grades. Even if cutters are willing to take the risk to polish a flawless diamond, the end product only caters to a very small and specific niche market.

Most distributors won’t want to risk purchasing a single flawless diamond. Instead, most would prefer to buy several diamonds of lower grades where there is stronger consumer demand for them. As you would have guessed, the probability of selling a flawless diamond within a foreseeable time span is very low.

Since profitable businesses are all about selling and moving inventory to make money, having a huge sum of capital being tied up in the inventory isn’t a viable business strategy.

Ok, What About Included Diamonds?

Included diamonds (I1-I3) are a huge minefield to venture into even for educated consumers. I left them out too because I don’t recommend purchasing diamonds within this range. 99% of the time, included diamonds either have imperfections that affect a diamond’s brilliance or pose serious durability issues.

It’s no coincidence that these are the kind of stones that often appear in “blow-out” sales where prices are ridiculously low. Why do you think that jewelry stores can afford to market their inventory at “80% off” sale prices? The truth is, most jewelers aren’t giving discounts, they are just offering lower quality stones for sale.

How Should You Spend Your Money?

When you have to purchase an engagement ring within a certain budget, you need to be realistic and strike a balance between your requirements. Should you pay significantly more for a diamond of higher clarity when another one of a lower grade would look exactly the same to the naked eye?

This is a question no one else can answer but yourself. With the kind of money involved in diamond purchases, I think it is wise to give yourself more time to ponder before committing to a purchase.

For most consumers on a budget, the SI1-SI2 range will allow you to maximize cut and carat sizes without burning a hole in your pocket. However, these diamonds should be subjected to a case by case consideration since each diamond will have unique clarity characteristics. That’s why I recommend vendors like James Allen as you get to inspect diamonds with magnified 360° videos.

With that understanding in place, we will dig deeper into selecting slightly included diamonds and highlight the things to take note of on the next page…

What Our Readers Say…

2 Comments

Elyse Lim-

September 13, 2015 at 1:23 am

Hi Paul! Thanks for such an informative website!! I know you recommends buying diamond rings online but what do you think of Jared? Can you recommend me a physical store around DC area to look for a diamond ring? Thanks again!